Two independent situations follow:
1. On January 1, 2017, Divac Limited issued $300,000 of 10-year, 9% bonds at par. Interest is payable quarterly on April 1, July 1, October 1, and January 1.
2. On June 1, 2017, Verbitsky Inc. issued at par, plus accrued interest, $200,000 of 10-year, 12% bonds dated January1. Interest is payable semi-annually on July 1 and January 1.
Instructions
For each of these two independent situations, prepare journal entries to record:
(a) The issuance of the bonds
(b) The payment of interest on July 1
(c) The accrual of interest on December 31